Monday, July 13, 2015

Utrecht puts basic income to the test

While the Greece is currently the main focus of economical experiments, meanwhile in the land of wooden shoes the concept of basic income is getting an interesting treatment. Basic income being the social welfare model where everybody (presumably) gets a certain amount of money (per month) regardless of their situation.

It is going to be put into a test in Utrecht, Netherlands. This time it is not entirely political. 300 people living on welfare have been chosen and divided into groups. 50 of these people will receive something between 900-1300 (according to Quart's article). The idea is not to put basic income in use permanently, but to do an experiment to see if people will be "lazier" if they get free money. Local university is involved in the experiment.

Interesting part about this experiment is that there are two other groups as well. One which continues to receive benefits according to current legislation which is not that interesting, but provides a necessary comparison. The third group is the bomb. They have to earn their benefits through a system involving incentives to get rewarded. Think about a social welfare system were you would be required to do certain mundane tasks just to be considered receiving social benefits.

Of course there are requirements to be fulfilled before being eligible for social benefits in every country around the world. In Ireland to be eligible for Job seeker's allowance you have to have a certain amounts of job history behind you, you have to be unemployed, and you have to be looking for a job. I admit that it is not a lot that is being asked.

There are two reasons why this experiment's outcome could be criticized even before any final conclusions have been made. The amount of people participating is quite small. Only 50 people from 300 is participating in the basic income part. Sampling size is too small, and it is also too local to draw universal conclusions out of the outcome.

Secondly, all the selected people are already customers of the social welfare. Now the hypothesis of "people dropping out of job markets" is not included. I don't have any deeper insight in to this experiment as I was unable to find more details about the methodology that is being used. For starters I don't know how long the experiment will take. Will it last for a fixed amount of time or will it continue ad finitum and the sampling size is measured with the same questions every half an year or an year?

But we should be excited as this social experiment might give us actual information about how the basic income could and would affect behaviour. It will add much more weight to the debate concerning basic income than (politically) opinionated 'might-happens'.